Savings, sacrifice, and the “why” question

Here’s another post pulled from drafts.  Don’t you hate it when you leave notes to yourself assuming you’re going to know what you’re talking about and then months pass and you’re like, you know, you could have just left a link.

This post was initially inspired by a number of other posts happening around the same time period.

The SHUbox had a post, ClubThrifty had a post, and retireby40 had a post, and I really should find them and link to them.  We will see if I am successful.  Spoiler:  I wasn’t.

In any case, my commentary:

Saving for early retirement if you don’t want to retire early and are unlikely to need to retire early is ridiculous.  If you’re worried about being unable to work, then get disability insurance.  Still, worry about job loss because of age discrimination, working in a failing industry, or being forced into management (and thus wanting to quit) is a bit harder, and is a valid reason to save for at least partial early retirement– enough to fund a career change.

The fact that there are early retirement posts about how to handle (early) retirement if you’re not enjoying it and how to emotionally prepare for not going to a job so you’re not unhappy suggests not that there’s something wrong with people in that situation, but that perhaps early retirement was not the right option for them.  One suspects that rather than trying to come up with ways to make retirement less soul destroying, it might be easier to just stay in one’s job.  (A related recent post from Leightpf.)

But early retirement is not the only reason to save.  I really liked Rosa’s comment on this post (here I did myself the favor and actually linked).

we asked people who did save to write down why.. Most people gave the same set of answers – for unexpected expenses, for my kids, for retirement.

A number of people were unable to answer because the idea of not having savings horrified them. Why save? Why breathe?

But one woman gave the very best answer. “For myself.” That’s all. You might not know what your future self will want to do with the money, but the money will be there for whatever it turns out to be.

We save so our future selves aren’t in dire straights in an emergency.  So we have time to focus the time after a job loss on finding a good job rather than the first job that will pay a paycheck.  So that we can quit a miserable work situation without having another lined up.  So that we can focus on a medical emergency and not the cost of said emergency.  So that a car crash doesn’t make us unable to get to work because we can’t afford alternate routes.  Or a slow reimbursement or delayed paycheck doesn’t max out our credit cards pushing us into forced credit counseling or bankruptcy.  Or to get into the fancy nursing home.

We save for opportunity.  So we can take a year off or invest in something or someone important to us without hurting our future selves.

It’s ok to find the early retirement community demotivating.  It’s even ok to find paying off student loans unmotivating.

You don’t actually have to be motivated to save, you just need to save first, and enough that you will be living a reasonable lifestyle in the event of an emergency or job-loss.  Auto-deductions can help you take care of your future self.  So that way your future self will have money when you need it, and maybe even some when you really really want it.

Do you save?  Why or why not?

32 Responses to “Savings, sacrifice, and the “why” question”

  1. eemusings Says:

    Count me in the ‘why breathe’ camp.

  2. ralucacoldea Says:

    Why save? Why breathe?
    Also, I work in IT. The over 40s crowd is thin on the ground. Also: updating to a new technology once every 2 years makes me feel like I’m never on top of what I need to be doing. Also: crazy hours and unpaid overtime. Why would I want to keep doing this to myself when I’m 50 or 60 or 70? Or when I have a kid or 2?
    So I save.

  3. Leah Says:

    YES!!!! (even tho I am also in the “why breathe?” camp)

    I always say that money = freedom, and your post exemplifies that. For me, my biggest freedom is freedom from worry. I don’t want to retire early, and I don’t know what all my goals are. But I know that I have goals.

    This post is quite appropriate because my husband and I just talked about this over the weekend. Are we saving enough for retirement? Many blogs (some of which I read) would lead me to believe I better max out everything or I’m not saving enough. But, in reality, we’re currently saving somewhere between 20-25% of our income in retirement and a similar percent in liquid savings. I could put more into retirement and less to savings. But, the thing is, I LIKE having liquid savings. I love the idea that we can pick up and take a year off without going into debt, or we can buy a car at a moment’s notice. The savings actually help me be more frugal in a wonderful positive feedback loop. I can nurse along my decade old-car, buy in bulk, negotiate full-pay cash discounts, etc.

    Even when I made just $200 a week as an intern, I saved little bits. I think I had $25 a month auto-drafted to ING? Auto-draft makes savings so, so easy. But the essential part is to save. I tell my students my experience, and I encourage them to do the same starting right from their very first paycheck. Saving 50% of my first “real job” paycheck meant I could afford to take a 3 week trip to New Zealand when the chance arose.

    Saving for life!

    side note: I think my ridiculously long comments mean I need to go back to writing my own blog.

  4. Jenny F. Scientist, PhD Says:

    Because… how can anyone feel secure without a monetary cushion? What if the stove breaks? (My stove just broke.) What if you have a lot of medical expenses?

    (I saved up $3500 in college, on a scholarship, while working three jobs, being a full-time student with two majors, and paying the remaining cost of college (after parents and scholarship) in cash from what I earned. I know it doesn’t sound like that much but…. it was.)

    Also, spending money on non-food things causes me actual pain. But that may be a learned response.

    • Leah Says:

      A lot of people aren’t taught about the importance of savings. They think you can only save if you have TONS of money (tho the amount that is “tons” seems to continually increase as people make more). My SIL was taught to spend all money the second she got it because otherwise “they” (bill collectors, government, etc) would just come take whatever they’d saved. It’s taken her many years to fight against this mindset of poverty.

      I imagine most people with the mindset are not the types reading this blog. But many, many people are like that. “Oooh, I got an extra $100 this paycheck. Gonna go buy some new shoes!” rather than saying “ooh, an extra $100. I’ll put that in the bank for next time I’m sick so I can actually afford to take a day off and recover.”

      • nicoleandmaggie Says:

        And, being honest, if your family is like some of DH’s extended family, it is a lot easier to say, “hey give me free money because I’m sick and need to take a day off” than it is to say, “I want these $100 shoes”, and if you keep the $100, you may feel pressured to give it to the relative who bought shoes but is now sick.

        So in some situations it isn’t even irrational.

      • Jenny F. Scientist Says:

        Well, I definitely was taught about savings! I remember having my own car savings account when I was about five. My kid just got a savings jar for early lessons in economics. I started paying him for whine free homework.

      • Leah Says:

        Totally storing the whine-free homework idea. I do have a piggybank for my little one. So far, we put all the found change in there. She loves dropping coins in. Early financial literacy ftw.

  5. hollyatclubthrifty Says:

    I save because I want to be prepared. I’m scared about the future and I like to have my ducks in a row. Having children makes life a whole lot scarier, too. I save because I never want to be unable to take care of them! I also want to retire early if possible. If a doomsday situation never presents itself, I should have plenty of money.

  6. First Gen American Says:

    I’m another one in the breathe camp…although I did push off my retirement by 5 years with the house I bought…but I am also now living with my mom in a time when she really needs me, so it’s that choice thing again. The squirreling in my 20’s and 30’s allowed me that option in my 40’s.

    My family has gone through a lot of through wars, starvation, slave labor camps, etc. Luckily I have not seen any of that in my lifetime but it’s hard to have that opinion of everything will work out when my family has lived through hell. You know it’s possible, so you have to plan for the absolute worst.

    In some ways, I think the absolute best way to plan for an early retirement (provided you still have your health) is to keep learning new skills. I’m starting to see that I can make money in so many different ways if I feel so inclined and quite a few of them I can do as I age. Part of being a serial hobbyist is that if I really wanted to transition to retirement, I can fill my days gardening or making stained glass windows, or working on building websites, or even managing some non-profit (of which I am asked to be on boards all the time even now). This thirst for learning has given me A LOT of options. Yeah, most of them don’t pay as well, but in retirement it’s just mad money anyway. Anything you make is gravy.

    A lot of the CEO’s I have worked for feel very fluid about money too. They have gained and lost fortunes many times over. Oh well, I’ll just try something else and re-earn it. That confidence in one’s own earning potential is a very refreshing way of looking at things. Add some insurance for good measure and you’re good to go for the rest of your days.

    • Revanche Says:

      Several years ago I read that a better marker for success is the ability to think of new ways to earn money, rather than traditionally climbing the ladder in a corporate job and becoming stagnant or limited in your earning potential. It stuck with me but not in a great way as I’m not great at earning income in a non traditional path.

      I do pretty well at that, though, because like you, my family has lived through generations of war and poverty and change.

  7. Ana Says:

    I’m also in the “why breathe” camp. Having savings makes me feel safe & secure in a very fundamental way. I do not deal well without that security in my life. Actually getting a handle on our finances and keeping track of things has resolved a constant undercurrent of anxiety that I’d had for the past few years when I buried my head in the sand and just stopped keeping up with things. Even then the idea of saving solely for complete financial independence is not very motivating for me (we are a long way off from that, its way too abstract & far away to be enough to get me to give up our house cleaner, for example); I’m trying to think about in terms of priorities & values and making sure our spending matches up to those. I want to donate more to charity, I want to travel more, I want to spend money to buy time so that we feel less rushed…when I keep those things in mind its easier to pass up the cute shoes or wait for the book at the library rather than one-clicking it to my kindle.

    I agree that putting early retirement as the end-all and be-all is ridiculous for a lot of people. Sometimes I see posts on forums (you know the one) where people are clearly miserable in their lives & may have actual mental health issues, but the poster and all the advice believe the answer to every life woe is to save more & retire earlier. Sure there are toxic job situations, and being able to leave those is a real motivation to have a hefty emergency fund, but you can change your job situation without completely retiring forever and you can make your life happier in other ways than giving up paid employment.

  8. Cloud Says:

    I save for flexibility. Having money in the bank gives you more freedom in how you respond to situations. We’ve been running down our savings a bit recently, since I’m getting my business going and we just added a room onto our house. That’s not retirement (and we haven’t touched the money in our retirement accounts), but it has been worth every penny we’ve pulled from savings to do this. I hope to have a net influx into savings again soon, so that we can be ready for the next thing we want/need to do.

  9. Leigh Says:

    Count me in the why breathe category. I save because I do. I don’t know why I do – I just do. I love the security and freedom that my savings from the last decade are giving me. I’m not worried about paying back a signing bonus if I were to leave a job before my first year is up.

    I am finding though that the more money I have saved and the more money I make, the less I’m motivated to do my job just because they’re paying me… I have to really want to do it and it’s hard to find a job like that, especially when as a newish person to the group, you don’t have the seniority to ask for projects you would enjoy more.

    “Or a slow reimbursement or delayed paycheck doesn’t max out our credit cards pushing us into forced credit counseling or bankruptcy.” – This was my first reason for having an emergency fund. I was sent on an expensive work trip and I didn’t have a credit card, so I had to pay for everything upfront myself.

  10. Steph Says:

    I save to give myself a cushion in case something unexpected happens, and for future me. I saved my college graduation money and pinched pennies during my first year of grad school to build up an emergency fund – I secretly called it my “can quit grad school without moving back to parents’ house” fund, though these days it’s more “the $#^*$^#&@ grants office is really slow at reimbursements” cushion fund. A lot of students in my program have ruined their credit and pay a ton of interest because the typical time for reimbursements to be processed and paid out is 4 months. They owe me several thousand right now, but at least I can still pay rent and pay off my cards.

    My longer term savings for future me are small, and I’m mostly trying to set up the habit right now. I automatically kick a small amount into a Roth IRA every month, mostly so that when my pay goes up as a post-doc, I can just increase the contribution rather than having to start from scratch.

  11. crazy grad mama Says:

    Pretty much what everyone has said thus far: we save for security and flexibility. When my husband’s job became increasingly aggravating, one of the things that got him through it was knowing that he had the option to quit, because we have the savings to cover a job search. (Fortunately, he didn’t have to: a great new job came recruiting.)

    We also save so that we can have nice things in the future, like a house.

    • Rosa Says:

      I think the reason I never have just up and walked off a job one day is because I have always, always had the option. It is a whole different way to feel about a crappy situation, knowing you could leave if you really wanted to.

  12. chacha1 Says:

    The ship has sailed for me as far as “early retirement” goes (I’m 50) but … maybe it’s just me, but the ER “community” mostly turns me off. The voices seem to be mostly men who achieved ER through the patient support of wage-earning wives.

    My own husband achieved successful self-employment through the patient support of *this* wage-earning wife. But he won’t be retiring early because he does not save. And unfortunately, being where we are, our operating expenses are so high that there is simply no scenario where I start my own business or retire early. It’s not that I really want to – I think going out to a job is good for me on many levels – but there is that little ember of resentment that I didn’t get the same support/opportunity he got. So that colors my thinking on the whole issue.

    I save because I am strongly risk-averse, and because I am not afflicted with magical thinking.

    • First Gen American Says:

      You’re not the only one who has noticed this of the Blogging community in general. My least favorite part is when said bloggers go big time and then decide the next part of their growth and discovery phase doesn’t include their spouse.

      • nicoleandmaggie Says:

        That was just JD Roth though, right?

      • chacha1 Says:

        Well, JD and Kris did divorce, but I was reading pretty regularly at that time and did not get the sense that the decision was one-sided. It seemed like she wanted to stay in the big house and tend the big garden, and he wanted a more peripatetic lifestyle, and they couldn’t reconcile. Having known many people who have divorced, (and having myself waited to age 35 to marry) I don’t automatically discount the reality of irreconcilable differences, especially when people married young.

      • nicoleandmaggie Says:

        I’m pretty sure he said that she was blind-sided (in his somewhat-douchy announcement post) by it but eventually recovered and was happier and dating someone else (again, all from JD’s perspective) in later reportings.

      • First Gen American Says:

        There were also Several life coach blogger people I was following as well that did the same thing…right before JD did. I lost all interest in reading their blogs after that. It was right around the time people were able to sell more popular blogs for lots of money.

      • nicoleandmaggie Says:

        *shudder* That’s an area of the blogosphere I have never found remotely interesting– life coaching. Seems very MLM.

        I guess World Domination Summit was when I stopped being interested in GRS.

      • Leigh Says:

        I read posts later (this year maybe?) from JD saying that he had become not a very nice person over the course of building GRS and how much time that consumed from him and that had a damaging effect on his marriage.

      • nicoleandmaggie Says:

        Huh. I talked with him after he quit about an article he was doing freelance for a magazine and he was all, “I’ve never actually had to do *research* to write an article before. Usually these things take me so little time etc. etc. etc.” And I just thought… yeah… you’re talking to the wrong person. But who knows, maybe bragging about how little time things take was part of the World Domination Phase he was going through. I have not been keeping up with his life.

  13. J Liedl Says:

    We don’t save as much as we should but we aim to save in order to put money aside for Autistic Youngest. While we hope she becomes independent in the future, we figure that she’ll always need some help. I have no plans or interest in early retirement but we do stash money in a spousal RRSP for my partner as I earn oodles and he not so much. The spousal RRSP allows us to even that out a little bit!

  14. Revanche Says:

    For me, security, and my truckload of PTSD. I still occasionally have nightmares flashing back to the Crappiest of Old Days when we were broker than broke, I was eating one meal a day because there was no time or money, and the only way out was to work as much overtime as I could to make sure the lights and water stayed on and rent was paid. For years, I was an insomniac from the stress and the overwhelming pain that the stress triggered. I’d lay in bed, quietly with tears running down my face as whatever part of me was screaming in pain, wondering if I could or should survive. I hold my breath whenever those come back, as if it’s a monster in the house and it’ll leave if it doesn’t know that I’m there.

    So yes, why breathe? Plus I might have kept my family out of the fire but to this day I don’t believe that I have anyone to fall back on. I don’t rely on the kindness of strangers, friends, family or acquaintances because very few people helped me back then. The PF community was amazing when I was out of a job, though.

  15. Virginia Says:

    I love the answer, “for myself”. I think that’s the boat I’m in. I saved well in my twenties but I don’t think I really knew what my goals in life were at that time. Now I am in my thirties and I have established some good goals and will soon have enough money to pursue those. I am really looking forward to the next chapter of my life and I think I am close to prepared for it.

  16. Sara Says:

    For me, the answer to why I save is “because I don’t know what I’ll want.” My fiance and I are in are early 30s and don’t know if kids are in our future. He doesn’t know if he’ll want to be a stay-at-home dad, start his own business, or keep working at a traditional job for a steady paycheck. I don’t know if I’ll want to take a cut in pay to work for a non-profit. For me, it’s the way to keep my options open–so we can *choose* and not feel like our finances are forcing us down a particular path.

    Neither of us are high earners, and so far we’d both rather keep our low stress jobs we actually like in place of chasing after a higher paycheck and being miserable. Some of my friends chose the latter route in the quest for early retirement or other financial priorities; I’m satisfied with a simpler life and watching a budget so we can both save and enjoy life now.

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